Price trend

Last week, cotton prices rose slightly, driven by a positive macroeconomic environment. According to the SunSirs commodity market analysis system, as of November 3, the spot price of grade 3128B cotton lint was 14,859 RMB/ton, a weekly increase of 0.2%. Last week, the average settlement price of the Zhengzhou cotton futures main contract was 13,598 RMB/ton, an increase of 82 RMB/ton from the previous week, a rise of 0.6%.

Price Influencing Factors:

On the cost side: Harvesting in northern Xinjiang was nearing completion, with a clear trend of increased production; while yields in southern Xinjiang may fall short of expectations in some areas, overall a bumper harvest is expected. According to data from the National Cotton Market Monitoring System, as of October 30, the national new cotton harvest progress was 87.1%, an increase of 1.9 percentage points year-on-year; the processing rate was 39.9%, an increase of 0.5 percentage points year-on-year. Last week, the average weekly purchase price of machine-picked cotton was around 6.3 RMB/kg, up 1.28% week-on-week, while the average purchase price of hand-picked cotton was 7.04 RMB/kg, up 0.14% week-on-week.

Internationally: The fifth round of trade negotiations between China and the United States and the meeting between the two heads of state boosted market confidence. The Federal Reserve's interest rate cut, coupled with rising international grain prices, led to an increase in international cotton prices. The average settlement price of the main New York cotton futures contract was 65.26 cents per pound, up 1.14 cents per pound from the previous week, an increase of 1.8%.

On the demand side: the downstream textile market was relatively flat, with limited new orders, mostly small and short-term orders. The operating rate of enterprises remained stable. With the new cotton coming to market, market resources were abundant, and downstream procurement became more cautious, with restocking mainly focused on small orders for immediate needs.

Market outlook

Overall, the cotton market was characterized by ample supply and weak demand. Although improved macroeconomic trade conditions boosted market confidence, downstream buyers remained cautious, primarily focusing on replenishing inventory to meet immediate needs. Increased supply and weak demand had resulted in insufficient industry-driven growth, and cotton prices are expected to fluctuate in the short term. Attention should be paid to the impact of seed cotton procurement prices and macroeconomic policies on the market.

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